Today, we embrace accountability and leadership in advocating for the protection and respect of workers worldwide, because it is the right thing to do, and because it makes our business more resilient and more innovative.
A lot has changed. When we first established our business, common thinking was to chase cheap labor. It was assumed that paying the lowest labor costs would make for the most profitable supply chains.
By the 1990s, we were a company on a sharp growth trajectory when we were hit with allegations of poor working conditions in our supply chain. This was a searing experience that showed us we had unintentionally built a business model that was transactional and disengaged, lacking the long-term perspective needed to enable a fair or growing supply chain.
We gained clarity through our experience. We became the poster child for all things wrong with globalization, and went from one crisis to another until we confronted the truth – that supply chains needed to be re-designed with the worker and the environment at the center. We vowed we’d disrupt ourselves and the industry, and invent new ways to run supply chains, and new ways to create products. We saw that as the leader in the industry we could innovate new ways to build businesses, ones that would make products in lean, green, equitable and empowered supply chains. We made our baseline requirement protection and respect for all workers.
Back then, we believed that factories themselves would protect and respect workers consistently without engagement from Nike. This disengaged model did not work. Today, we require the factories we source from meet our Code of Conduct standards, which are some of the highest in our industry. We rely on announced and unannounced audits by third party auditors to gain regular insight into the adherence to our standards across our suppliers – a process that is supported by universities and NGOs. When problems do occur, they can be a symptom of a systemic problem. Rather than remediating only the specific occurrence, we expect factory management to also assess and address the root cause, and we work with factories to help them build capabilities for the future so the problem doesn’t happen again.
Today, we know that a valued and engaged contract factory workforce improves compliance levels and business performance – it raises quality of product, improves business performance for the supplier, and, benefits workforce and their families. We incentivize suppliers to invest in people-centered lean and human resource systems, culture and capability to enable their workforces to perform their best. We encourage all our strategic suppliers to find modern methods, especially relying on mobile technology, to communicate with, train and support their workforces. And, we are beginning to share learnings with our suppliers of the successes on a strategic approach to compensation in improving pay levels for workers, productivity, and overall performance of the factory.
We also used to believe that Nike should go it alone – that the nature of our relationship with other brands was purely competitive. We have learned that it’s the product that needs to be competitive, not the compliance and sustainability dimensions of the supply chain. Today, like many other industries and many other brands in our own industry, Nike believes that aligning on industry-standard audit tools with other brands that share our source base is a powerful, pre-competitive approach to global change. Only by working together, across brands, can we implement positive change at scale.
Over these 20 years, we’ve made deep-rooted improvements, understanding that our purpose includes driving positive change for workers in contract factories and across the industry. We have recognized that only through investment by us and by our suppliers in innovation, new technologies and capabilities, and incentivizing this investment through our sourcing practices, will we be able to sustain a resilient, agile and responsible supply chain in the long-term.
We own the mistakes we’ve made in the past – because they forced us to learn that vulnerabilities are opportunities to build new capabilities, which can ultimately become our strength. Today, we stand behind our investment in responsible and sustainable manufacturing because we know that the global marketplace of the future is built on a shared commitment to safeguarding and empowering those who make our product.
The graphic below outlines some of our major milestones over the past 30 years.
In our past, we have also faced allegations of sourcing from contract factories that employ underage workers. We want to be clear — we specifically and directly forbid the use of child labor in facilities contracted to make Nike products, and we regularly monitor contract factories to remain vigilant. We do not make exceptions to this for new suppliers entering our source base nor for any other types of suppliers.
We require our contract factories to comply with Nike’s new Code of Conduct and Code Leadership Standards, which are audited by independent monitors. Nike’s standards meet or exceed international standards set by the International Labour Organization (ILO). The ILO Convention on Child Labor is available here.
Our Code of Conduct requires that workers must be at least 16 years of age, or past the national legal age of compulsory schooling and minimum working age, whichever is higher.
With any report of practices that don’t meet our standards, or when a supplier’s facility is found to have violations of Nike’s standards, the factory is required to remediate all issues identified and provide on-site verification of the remediation. If a concern is raised by a third-party, Nike promptly investigates and requires corrective actions for any verified issues identified. Should a supplier fail to remediate confirmed issues identified by an audit or allegation investigation according to Nike’s requirements it would be subject to review and sanctions, including potential termination of the relationship.
Nike’s Code Leadership Standards include specific requirements on how suppliers must verify workers’ age prior to starting employment. They also contain specific requirements for actions the facility must take to remediate a situation where the supplier violates Nike’s standards with focus on protecting the rights and wellbeing of the worker. Those requirements include:
- Removing the underage employee from the workplace;
- Providing support to enable the underage employee to attend and remain in school or a vocational training until the age of 16 or the minimum legal working age, whichever is higher; and,
- Agreement to rehire the underage employee when they reach the age of 16 or legal working age if the worker wishes.
We have also faced criticism for sourcing from contract factories – often called “sweatshops” – with low wages and poor working conditions. The term paints a picture of factories where workers are poorly treated, subject to dangerous working conditions, and made to work excessively long hours – all for poor wages. These kinds of conditions unfortunately do exist in our industry, often in countries without the means to enforce the law and at factories solely focused on producing low-cost product.
To uphold our standards of the highest quality in our footwear, clothing and equipment, our products need to be made in clean, safe factories with technology and frequent inspections. We’ve changed our whole business model to give preference to factories that operate in countries where governments help enforce labor standards. We also leverage our Country Risk Index that evaluates sourcing and manufacturing risk at a country level, taking into consideration political risk, social/compliance risk, economic risk and infrastructure and climate risk. Of the 559 factories we contract with, none exhibit the conditions that would deserve the title of sweatshops.
We have a very clear set of standards we require every factory to comply with or to exceed. And while we work diligently to verify that there are no factories with sweatshop-like conditions in our supply chain, we do see examples where the working conditions can be improved, and we do see factories that are not providing a safe, hygienic and healthy workplace, or paying wages correctly. That’s when we take action.
We are committed to responsible employment practices for our own employees, and we expect the same of our suppliers. We also believe that the protection of life and health in the workplace is a fundamental right. Our vision is that each and every worker at our suppliers’ facilities are provided a safe, hygienic and healthy workplace, with robust safety management systems that foster a strong culture of safety, and paid a fair wage.
Nike’s Code of Conduct requires our suppliers to pay their employees at least the local minimum wage, or prevailing wage, whichever is higher, including premiums for overtime worked, legally mandated benefits and compliance with social insurance regulations required by country law. Nike’s Code Leadership Standards also contain requirements for suppliers to work on the progressive realization of a fair wage, defined as meeting employees’ basic needs including some discretionary income.
We require suppliers producing Nike products to properly inform their workers about potential hazards of their job as well as adequately train them on how to perform their work safely. Through our Code of Conduct and Code Leadership Standards we have detailed requirements aligned with internal standards and best practice for evaluating and minimizing a wide range of risks to workers and to the facility.
Forced labor, low wages and poor working conditions still exist today across multiple industries, including ours and especially in the world’s poorest countries. We know there is still major work to be done and we are committed to doing it.
We are inspired by seeing many of our peers also addressing labor issues head-on as they take a stand against these conditions in their production processes. But how long until we see a full eradication? What does it take to shift the industry and alter the way billion-dollar businesses operate?
We don’t have all the answers, but we do know it will take industry-wide, systemic change from all players in our industry.
We work with multi-stakeholder initiatives, including the Fair Labor Association, Better Work and the Better Cotton Initiative to address critical human rights risks across different levels of the supply chain. Through these partnerships, we work to address and prevent child labor and improve labor practices globally.